* Economy worries hit markets, China bounce fizzles
* European stocks down 3 percent, Japan down 3 percent
* Wall Street set for losses
* Dollar recovers, commodities slide, oil off 4.5 percent
(Updates, adds Wall Street outlook)
By Jeremy Gaunt, European Investment Correspondent
LONDON, Nov 11 (Reuters) - Economic gloom overpowered
financial markets again on Tuesday, sending stock and commodity
prices sharply lower as ebullience about China's $600 billion
stimulus plan fizzled out.
Wall Street looked set for losses at the open.
Bad news from corporate America -- General Motors <GM.N>
shares at a 62-year low, Goldman Sachs <GS.N> seen posting a
first-ever quarterly loss, and No. 2 U.S. electronics retailer
Circuit City's <CC.N> bankruptcy protection filing --
overwhelmed any optimism.
The dollar turned slightly higher despite a short-lived
bounce for the euro from an improvement in German economic
sentiment.
"The support we saw in the early part of yesterday's session
off the back of the Chinese economic stimulus plan is looking to
have been rather short lived," Matt Buckland, dealer at CMC
Markets, wrote in a note.
"Worrying corporate news from the U.S. plus suggestions that
the recession will be longer and deeper than previously thought
are adding to the downside."
The pan-European FTSEurofirst 300 <> stock index was
down 3 percent, following a similar loss on Japan's Nikkei
average <>.
Emerging market stocks as measured by MSCI <.MSCIEF> lost
around 3.8 percent, taking that index into negative territory in
what would be the sixth month in a row for losses.
The emerging market index has lost nearly 55 percent of its
value so far this year while its developed market counterpart
<.MIW00000PUS> has lost around 42 percent.
The worries about economic and corporate growth also spread
to commodities, which had rallied strongly on Monday because of
the Chinese stimulus package.
Oil <CLc1> lost 4.5 percent to about $59.50 a barrel. Gold
<XAU=> pared 1 percent to around $738 an ounce and London copper
<MCU3> tumbled 4 percent.
Demand for commodities -- and hence their prices --
generally falls when economies slow.
DOLLAR RECOVERS
The dollar and yen were broadly supported on the weak tone
in equity prices.
The euro was down 0.2 percent against the dollar at $1.2707
<EUR=, its gains from a better-than-expected reading in a key
German indicator survey <ECON> erased as the single currency
was weighed down by weakness in European share prices.
"There is still the risk aversion factor which is supporting
the dollar and yen but it is not quite as much as before, as
currencies are settling into ranges," said Daragh Maher,
currency strategist at Calyon in London.
The ZEW Institute's index of German economic sentiment came
in at -53.5 in November, improving from -63.0 in October. It
also beat market expectations for a reading of -62.0
[].
The euro hit a record high against sterling of 82.14 pence,
according to Reuters data <EURGBP=> while the pound fell 0.5
percent against the dollar at $1.5527 <GBP=>.
The Japanese currency was down 0.1 percent against the
dollar <JPY=> at 97.88 yen.
Euro zone government debt was mixed.
Two-year bond yields <EU2YT=RR> were flat at 2.396 percent,
with 10-year yields <EU10YT=RR> 2 basis points higher at 3.694
percent.
(Editing by Ron Askew)
